Citizens insurance board offers to settle claims for $102 million

The board that oversees the state's insurer of last resort offered a $102.8 million settlement Wednesday to more than 25,000 policyholders who say the agency was late in adjusting claims after Hurricanes Katrina and Rita in 2005. The offer by the board of directors of the Louisiana Citizens Property Insurance Corp. came on a 12-0 vote in a public meeting after the board discussed the litigation out of public view for 2½ hours.

Sen. Eric LaFleur, D-Ville Platte

The board offered to pay $92.8 million to 18,563 individuals who are members of the class action lawsuit Geraldine Oubre et al., v. Louisiana Citizens Fair Plan. The other $10 million would be paid to about 7,500 other claimants who are not part of the lawsuit but could be incorporated into it.

Sen. Eric LaFleur, D-Ville Platte, a member of the Citizens board and chairman of its litigation committee, said that $70 million would be paid "almost immediately" and the rest of the money would be paid by the end of November. It could be delayed if one or more named storms causes Citizens to pay at least $50 million in new claims.

LaFleur said the settlement offer includes $6 million that Citizens has paid policyholders instead of posting an appeal bond.

LaFleur said the Citizens offer caps at $25 million the amount of money the attorneys handling the class action lawsuit can receive. Insurance Commissioner Jim Donelon said that could be a deal-breaker.

"I don't think they (the plaintiffs lawyers) will accept a $25 million cap on the attorneys' fees, " Donelon said.

The court costs would also be borne by the plaintiffs along with a $6 million fee that may have to be paid to the Jefferson Parish Sheriff's Office when an order to seize Citizens assets was issued by Jefferson Parish state District Court Judge Henry Sullivan weeks ago. The seizure has been put on hold pending a hearing in March.

Attorneys for the plaintiffs declined comment on the offer until they receive a written copy of it.

In 2009, Sullivan awarded members of the class action $92.8 million in damages, but Donelon and Citizens have appealed the ruling. With interest mounting at $10,200 a day, the judgment is now about $104 million.

Donelon and Citizens tried to get the judgment overturned by the state Supreme Court on two occasions and lost each attempt on 4-3 ruling. They also asked the U.S. Supreme Court to delay payment of the judgment but that was rejected.

Donelon has until April 15 to ask the nation's highest court to review the state court rulings, something of a legal long shot that Donelon said he may not pursue.

Citizens two weeks ago offered an $80 million settlement with a cap of $25 million for the lawyers involved; the plaintiffs lawyers countered with a $105 million settlement, still about $38 million less than Citizens' total exposure.

Fred Herman, one of the chief lawyers in the class action lawsuit, said he would not dispute those numbers but declined to say what the plaintiffs lawyers asked for.

Donelon said he intends to ask the Legislature to approve a bill that would declare Citizens a state agency, insulating it from having its assets seized in future court cases.